Future Business Leaders of America (FBLA) Agribusiness Practice Test

How do cooperatives allocate economic benefits to its members?

1. Based on the number of meetings attended

2. Equally among all members

3. According to member's use of the co-op

4. Based on equity contributions

The correct answer is: According to member's use of the co-op

Cooperatives are unique business entities that operate for the benefit of their members, and they allocate economic benefits based on individual members’ use of the co-op. This means that members receive profits or benefits proportional to how much they utilize the cooperative's services or buy from it. For instance, a member who purchases more goods or services from the cooperative would receive a larger share of the earnings compared to a member who uses the co-op less. This system creates an incentive for members to engage more with the cooperative, as their level of participation directly influences the financial rewards they receive. It also promotes fairness, as members who contribute more to the cooperative’s business through their purchases are acknowledged for their support and loyalty.